Internet of Things

The next big wave of data-driven technological innovation will connect physical devices embedded with tiny computing devices to the Internet in an effort to seamlessly improve the measurements, communications, flexibility, and customization of our daily activities.

This “Internet of Things” (IoT) is already growing at a breakneck pace and is expected to continue to accelerate rapidly.

Recent projections of the economic and social benefits of networked IoT technologies predict that tens or even hundreds of millions of networked devices will proliferate globally as industrial and infrastructure inputs, consumer wearables, smart home technologies, and automated transportation services. The economic gains in terms of cost savings and enhanced productivity growth are projected to be enormous. Trillions of dollars in value will be created through cost-savings through preventative health care, minimized accidents, patient monitoring, efficiencies in manufacturing and distribution, and seamless home and municipal infrastructure improvements.

These potentially large economic gains must be considered when policymakers are debating policy for IoT. It is always easy to conjure up hypothetical worst-case scenarios about how some of these technologies may be misused, or how they might disrupt certain sectors and professions.

More generally, long-term social progress and economic prosperity hinge upon a general willingness to engage in ongoing trial-and-error experimentation with new technologies like IoT.

You can find more Mercatus research and commentary on the Internet of Things and networked technologies below.

This summary provides a brief explanation of IoT technologies before describing the current projections of the economic and technological impacts that IoT could have on society. In addition to creating massive gains for consumers, IoT is projected to provide dramatic improvements in manufacturing, health care, energy, transportation, retail services, government, and general economic growth. Poorly considered policies should not prevent us from reaping these enormous benefits.

This study shows that preemptive, top-down regulation would derail the many life-enriching innovations that could come from new technologies. The study argues that permissionless innovation, which allows new technology to flourish and develop in a relatively unabated fashion, is the superior approach to the Internet of Things. Combining public education, oversight, industry best practices, and transparency in a balanced, layered approach will be the proper way to address concerns about the Internet of Things—not prospective regulation based on hypothetical scenarios.

Thierer submitted Mercatus research to the NTIA as the body considered how best to approach IoT technologies. Thierer had two key takeaways. First, by every measure, the economic benefits associated with IoT adoption will be enormous. Estimates of the total global impact of IoT technologies range from $2.7 trillion to $14.4 trillion in new economic value by 2025. Second, those amazing benefits will only come about if America gets public policy right for this exciting new set of technologies. The Internet revolution was powered by “permissionless innovation”—the idea that experimentation with new technologies and business models should generally be permitted without prior approval. By embracing the same vision for IoT, the United States can incentivize IoT innovation and also make it more likely that the next generation of tech entrepreneurs launch those devices and services domestically.

This statement will address how wearable technologies will impact economic growth, how policymakers should approach wearable technologies, and how cybersecurity and privacy concerns should be addressed. Wearable technologies, or “wearables,” are a significant subset of Thierer’s broader research on the “Internet of Things.”

The Internet of Things offers compelling benefits to consumers, companies, and our country’s national competitiveness that will only be achieved by adopting a flexible policy regime for this fast-moving space. While there are formidable privacy and security challenges associated with the Internet of Things, top-down or one-size-fits-all regulation will limit innovative opportunities. With those two points in mind, we should seek alternative and less costly approaches to protecting privacy and security that rely on education, empowerment, and targeted enforcement of existing legal mechanisms. Long-term privacy and security protection requires a multifaceted approach incorporating many flexible solutions.

This public comment to the FTC argues that the Internet of Things—like the Internet itself—should not be subjected to a precautionary principle, which would impose preemptive, prophylactic restrictions on this rapidly evolving sector to guard against every theoretical harm that could develop. Preemptive restrictions on the development of the Internet of Things could retard technological innovation and limit the benefits that flow to consumers. Policymakers should instead exercise restraint and humility in the face of uncertain change and address harms that develop—if they do at all—after careful benefit-cost analysis of various remedies.